David Zolt--SWR--YT Video

[Elbata]

With Bill Bengen's AMA on Reddit, it has spawned more discussion on SWR.

In one of the threads, (who knows, could have been on the Boglehead forum), someone mentioned David Zolt.

This is Mr Zolt's lone video on YouTube.

Mr Zolt says 4.5% which Bengen says is an almost bullet proof withdrawal rate, could be higher (much higher percentage wise) and still achieve a 95% success rate after 30 years.

Mr Zolt uses a TAR (Target Adjustment Rate) that is quite simple. Instead of taking a % withdrawal rate including inflation automatically, he proposes this:

If it's a bad year for returns, don't include inflation rate in next year's withdrawal. By doing simply that, the chance of failure is greatly reduced.

It's a fascinating discussion, in which he used over 10,000 different scenarios.

Also, towards the end of the 30 years, when because of inflation--on a $1MM portfolio, and one is now drawing $150,000/year, it seems to me simply readjust one's withdrawal rate.

 

[ERD50]

I didn't watch the video, but why should anyone be surprised that you can take out more initially, if you have a plan to take out less later if necessary?

There's only so much money, I can't see any 'magic' to getting more money out.

To each their own, but my spending plan includes what I, well ..., plan to spend. I don't want to cut back on anything, I'd rather take a conservative amount now, knowing it is unlikely I will need to cut back in the future.

Now, if someone has a lot of what they consider 'fluff', that they could easily do without, fine, maybe that works for them. And I used the word "fluff" instead of "discretionary", as anything beyond food & shelter and basic health care is pretty much "discretionary".

How would "not taking an inflation rate" in next year's withdrawal have worked out in the 1980's for you? In fact, it is that inflationary period that is one of the big causes of failure in FIRECalc reports. So sure, just ignore it, and everything is unicorns and rainbows and puppies.

OK, I just plugged it into an inflation calculator. From 1980 tom 1990, your $100 would only buy about $61 worth of stuff. How comfortable would that be?

And some years from now, someone will post some other cherry-picked plan that avoids the future 'bad case'. But it is all rear-view mirror looking.

-ERD50